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SUMMARY <br /> Report of The Colorado State Auditor 5 <br /> 1 <br /> Summary of Responses to the Recommendations: <br /> The Department of Natural Resources(the"DNR")and the Colorado Water Conservation Board(the <br /> "Board"or"CWCB")agree with the State Auditors'recommendations even though we do not agree <br /> with some of the associated findings. <br /> The CWCB Construction Fund Loan Program has undertaken a significant transition during the last <br /> five years. With a small staff and a very expansive charge from the statute and the Board,we have <br /> increased the number of completed projects 56 percent in the last five years, from 110 to 172 <br /> projects, and increased the total value of completed projects 90 percent, from$65 million to$123 <br /> million. We have also increased the average number of projects completed annually between <br /> 86 percent between 1987-1993 and 1994-1998 while we increased the average value of projects <br /> completed annually by 176 percent between the same time periods. This increase in the number of <br /> ' communities,businesses and individuals we have assisted in recent years has tested our ability at the <br /> present level of staffing to assure accurate and timely monitoring of various loan compliance and <br /> record keeping activities. Therefore,we are evaluating programmatic reorganization opportunities <br /> to improve our effectiveness within existing resources and a decision item for Fiscal Year 2000. <br /> 1 In reinvigorating and expanding that Program,we have already alleviated several bottlenecks,first <br /> in the contracting process and then the feasibility study phase. With the support of this audit, our <br /> next focus is on our accounting and compliance responsibilities. We also acknowledge the ongoing <br /> need to continue improving the loan application review and approval process, including the <br /> documentation and analysis of key information provided by applicants and the assessment of <br /> collateral requirements. Complete documentation of the technical and financial feasibility of <br /> potential loan projects is important, and the well-established practice of making "conditional <br /> approvals" should be limited to a reasonable number. <br /> The Board believes that its annual funding recommendations, and those added by the General <br /> Assembly, are consistent with the statutory purposes included in Section 119(1), which are very <br /> broad, and the Section 122(1)priorities. We have worked closely with the Governor's Office and <br /> General Assembly in the consideration of recommendations presented each year and do not agree <br /> with the State Auditor's suggestions that these recommendations represent present "statutory <br /> compliance"problems. <br /> The Board has been adopting more"business-like"policies and procedures for the Construction Fund <br /> Loan Program, and the State Auditor's perspective is very helpful and supportive in this regard. <br /> However,we do not consider this simply a"loan program." From the beginning,the Program was <br /> intended to promote sound water resource development by providing easy access to below-market <br /> financing for projects that develop or improve the management of water supplies in Colorado. <br /> Concerns based upon the suggestion that the current rate of assistance may exceed current needs,and <br /> that there isn't evidence of loan applications being denied, reflect a difference in perspective <br /> 1 <br /> 1 <br />